Global Ideas

Brazil – More Pressure on Petrobras

Just when you thought Petrobras (PBR, quote) was re-emerging as an interesting investment play and not just a "trade", there are headlines today in Fohla, a local newspaper in Brazil, that expectations of a fuel price increase may be canceled.

There is talk that with inflation running higher than the target rate of 6.5%, the government cannot run the risk of the political hit they would take from higher gas prices.

This has been Petrobras' downfall for years and a major impediment to fundamental change at the company.

The June price increase was largely priced in and now there may be a freeze on all fuel prices until 2015 (after the elections). Negative.